East Devon has raised fears about its future finances after stating it could be one of the “worst affected” districts if proposed changes to business rates go ahead.
The government is considering overhauling the business rates system, which is the way companies are charged for owning commercial property.
Senior figures at East Devon District Council will tell its cabinet this week that the council could suffer “significant negative financial implications due to the so-called Fairer Funding Review.
This review aims to alter the level of business rates that companies pay, with a possible lower level for some but a potential increased level for others.
Most worryingly for town halls, though, is the potential for the business rates retention system to be changed too.
At present, councils keep around 50 per cent of the business rates they collect, with the other portion going to central government.
But there are concerns that a higher percentage could be requested by Westminster.
“This council has been highlighted by the Department of Housing, Communities and Local Government along with 41 other district councils and nine Lonodn boroughs as to be the worst affected by the proposed changes,” the cabinet will hear on Wednesday (1 October).
“The main driver for this is the rebasing of business rate income and loss of retained business rate growth.”
Estimates suggest that could lead to a £5 million hit for East Devon.
This financial impact is an important factor in the ongoing process of local government reorganisation.
East Devon District Council will cease to exist under whichever proposal is taken forward, but its income levels, and the amount of debt it has, will be a factor in any new unitary council that East Devon and other districts become a part of.
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